New Delhi: China Thursday committed USD 20 billion investment over the next five years and agreed to provide greater market access to Indian products in farm, pharma and gems and jewellery sectors, with a view to reducing the large trade gap with India.
The ‘Five-year Trade and Economic Development Plan’ was signed by Commerce Minister Nirmala Sitharaman and her Chinese counterpart Gao Hucheng in the presence of Prime Minister Narendra Modi and visiting President Xi Jinping.
The agreement seeks to reduce the bilateral trade imbalance and strengthen investment cooperation to realise USD 20 billion investment from China in the next five years, among other things.
The Chinese financial pledge, however, is much less than what India got from Japan during Modi’s visit less than a month ago. Japan had pledged USD 35 billion spread over five years.
As per today’s agreement, China will provide market access to Indian pharmaceuticals, handicrafts, textile, gems and jewellery, bovine meat, oil meals, basmati and non-basmati rice, fruits and vegetables.
India has been pressing China to lower duties on these items with a view to encouraging exports and bringing down the trade gap that increased exponentially from USD 18.65 billion in 2009 to USD 36.86 billion in 2013.
Addressing a press conference after signing of the agreement, Modi said: “I am pleased with the agreements on two Chinese industrial parks in India and a commitment to realise USD 20 billion of Chinese investments in the next five years. This opens a new chapter in our economic relations.”
As per the MoU signed in June, 2014, China will set up a auto industrial park in Maharashtra and electricity equipment industrial park in Gujarat.
Expressing concerns over slowdown in trade and worsening of the trade imbalance, Modi said: “I sought his partnership in improving market access and investment opportunities for Indian companies in China. President Xi assured me of his commitment to take concrete steps to address our concerns.”
Sitharaman and Gao also signed the minutes of the tenth session of India-China Joint Group on Economic Relations, Trade, Science and Technology (JEG) held earlier this month in Beijing.
As per the minutes, India asked China to relax regulatory norms for Indian banks operating there. China on its part, anted India to expedite approval allowing Bank of China to establish a branch in Mumbai.
The Chinese side wanted India to restrain anti-subsidy investigations against China and urged business communities of both countries to resolve disputes through dialogue, according to the minutes. They also wanted India to eliminate or reduce import duty on power equipment from China.
The Indian side maintained that increasing trade frictions were mainly caused by expansion of bilateral trade volume and reiterated that India does not pursue discriminatory policy against China or any country.
India has also been pressing for export of IT services to China and promotion of tourism between the two countries.
In order to encourage tourism, it was decided to designate 2015 as the ‘Visit India Year in China’ and 2016 as the ‘Visit China Year in India’.